May employment drops 40,000 as prolonged Middle East war weighs on labor market; government to train 1,000 youth specialists, ease job retention subsidies and fast-track industrial transition plan

Deputy Prime Minister and Finance Minister Koo Yun-cheol chairs a ministerial employment meeting at the Government Seoul Building in Jongno-gu, Seoul, on Thursday. [Ministry of Economy and Finance]
Deputy Prime Minister and Finance Minister Koo Yun-cheol chairs a ministerial employment meeting at the Government Seoul Building in Jongno-gu, Seoul, on Thursday. [Ministry of Economy and Finance]

The government moved Thursday to accelerate youth employment initiatives and draw up new job stability measures in response to a labor market shock driven by the prolonged Middle East war. The number of employed people fell in May for the first time in 17 months, with hiring slumping among young workers and across key sectors including manufacturing, construction, and agriculture and fisheries.

Deputy Prime Minister and Finance Minister Koo Yun-cheol convened a ministerial employment meeting Thursday at the Government Seoul Building, bringing together officials from the Ministry of Employment and Labor, Ministry of Trade, Industry and Energy, Ministry of Education, Ministry of Health and Welfare, Ministry of Small and Medium-sized Enterprises and Venture Business, Ministry of Planning and Budget and Ministry of Statistics to assess the current employment situation and discuss the government's response.

Koo said the government had worked to keep inflation in check — cutting the rate by 0.6 percentage points through measures such as a petroleum price cap, despite the spillover effects of the Middle East war. But he warned that the prolonged conflict, rising raw material prices and supply disruptions had pushed May's employed population into negative territory for the first time in 17 months, with uncertainty in the labor market continuing to grow.

He said the youth jobs crisis was deepening and that weakness across manufacturing, construction, and the agriculture and fisheries sectors showed no sign of abating.

The government said it would focus its policy efforts on reviving youth employment. It plans to move quickly on the flagship programs under the "Youth New Deal" announced in April — including the K-New Deal Academy, Youth Leap Boot Camp and KDT (National Tomorrow Learning Card training) — while identifying additional complementary measures. In the second half of the year, the government will expand training for young specialists in advanced industries such as Agentic AI to cover more than 1,000 participants.

To prevent financial difficulties at industrial worksites caused by the prolonged Middle East war from translating into job insecurity, the government will also strengthen employment stability measures. After easing eligibility requirements for job retention subsidies last month, it is rolling out employment stabilization steps through the "Buttim-eum Project," targeting regions with a high concentration of at-risk industries. The government said it would closely monitor regional and sector-by-sector trends and, if necessary, designate employment crisis zones and special employment support sectors.

The government will also push ahead with a "corporate support-job linkage fiscal support plan" to strengthen fiscal incentives for job-creating companies. It said it would move quickly to finalize a "basic plan for employment stability in industrial transition," designed to support workers who need to retrain as industries restructure in response to AI transformation (AX) and green transformation (GX).

Koo said the government would align all economic policymaking and implementation — including structural reforms, not just Youth New Deal programs — with the perspectives and expectations of young people. "With uncertainty from the Middle East war persisting, every ministry must stay especially vigilant and respond with full force," he said.


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